Zimbabwe Bank Chief: Don't Indigenize Foreign Banks

The head of Zimbabwe's central bank has warned the government against its plan to make foreign banks give up majority shares in their local operations.

A government notice published this week said foreign banks and other firms have one year to transfer a 51 percent stake to black Zimbabweans.

In a statement Wednesday, Gideon Gono said he will discuss the matter with President Robert Mugabe but said the regulations are "devoid of detail and rationality" and contradict other existing laws.

President Mugabe and his ZANU-PF party have been pushing a policy of "indigenization" that would give black Zimbabweans majority shares in foreign-owned businesses. But the policy is opposed by their partners in Zimbabwe's unity government, the MDC party, which says it will discourage investment in the country's battered economy.

Gono, who was appointed central bank chief by Mugabe in 2003, denied accusations that he is "protecting" foreign banks because he owes them large amounts of money.

He acknowledged that some family-owned companies owe millions of dollars to banks that extended them lines of credit, but said he does not interfere in any legal process regarding those loans.

Foreign banks operating in Zimbabwe include British firms Barclays and Standard Chartered, and the South African banks Stanbic, MBCA and CABS.